Birmingham, AL – ProAssurance Corporation (NYSE: PRA) reports net income of $13.9 million, or $0.26 per diluted share, and operating income(1) of $3.5 million, or $0.06 per diluted share, for the three months ended December 31, 2022.
Highlights – Fourth Quarter and Full Year 2022(2)
- Gross premiums written of $224 million (+3%) and $1.1 billion (+15%)
- Favorable prior accident year reserve development of $5 million and $37 million
- Consolidated combined ratio of 104.2% and 105.3%
- Consolidated operating ratio of 93.0% and 96.0%
- The full year operating ratio improved by 1.7 points compared to 2021
- Net investment income of $29 million (+53%) and $96 million (+36%)
- The full year net investment income increased by $25 million compared to 2021
- Adjusted book value per share(1) of $25.99 as of December 31, 2022. Adjusted book value per share was $26.16 as of December 31, 2021.
Management Commentary & Results of Operations
Our fourth quarter and full year results for 2022 reflect two major trends in our markets. In our operating segments, competition and higher than anticipated loss severity trends exert pressure on loss ratios and underwriting profits. In the investment markets, the higher interest rate environment provides meaningful improvement in the return we earn on our invested assets, and our investment leverage enhances the impact the higher rates have on our earnings potential.
Full year premiums continued to grow in all of our core operations, as the Specialty P&C, Workers’ Compensation Insurance, and the Segregated Portfolio Cell Reinsurance segments all produced increases in the top line for 2022.
Ned Rand, President and Chief Executive Officer of ProAssurance, highlighted the strong premium retention in the Specialty P&C segment, which improved 4 points in 2022. “I’m pleased to see that in a challenging marketplace, our customers are remaining loyal to the ProAssurance brand and our reputation in the medical community. Thank you to all our team members who work hard every day to provide that top-notch service. Our Workers’ Compensation Insurance segment generated a positive result, as their efforts brought the combined ratio in the segment to below 100% for the year, a nice improvement over 2021.”
Rand continued, “Throughout 2022 we continued to make progress in integrating systems, advancing our data science capabilities, and returning to normalized staffing levels. We believe these are all important contributors to our future success. Our policyholder retention and ability to achieve premium rate increases are bright spots for our top line growth and profitability. Our industry faces the challenges of potential inflationary pressure on expenses and a medical professional liability loss environment where we are seeing upward pressure on claims severity.”
Due to the increase in interest rates and the resulting improvement in investment income, our consolidated operating ratio improved nearly 2 points to 96.0% for the year.
Net investment income showed substantial growth this quarter, increasing by 53% to $29 million. This continues a trend of higher investment income as a result of rising interest rates. We expect this to continue, as reinvestment rates are now considerably higher than the average book yield of maturing investments.
Our book value per share of $20.46 increased by 3.6% in the quarter. Adjusted book value per share, which excludes Accumulated Other Comprehensive Income (AOCI), is $25.99 as of December 31, 2022 as compared to $25.75 as of September 30, 2022.
The complete results release is available here: ProAssurance Results for Fourth Quarter and Full Year 2022
(1) Represents a Non-GAAP financial measure. See a reconciliation to its GAAP counterpart under the heading “Non-GAAP Financial Measures” that follows
(2) Comparisons are to the fourth quarter and the full year of 2021. All items are listed with quarterly results first, full year results second.